In this blog post you’ll learn how to find the best penny stocks to buy. And in our analysis, we’ll be sure to focus only on the best penny stocks (and avoid the high-risk trades). So why are penny stocks so exciting?
The reason is:
Individual investors and retail traders can trade penny stocks even if they have smaller brokerage accounts. That’s because trading the best penny stocks doesn’t require a lot of capital. You can buy hundreds of shares without breaking the bank – (and these larger volume buys are what’s often required to make a meaningful profit).
Of Course: you can also rely on third-party services like The Penny Stock Egghead if you want to let somebody find the best penny stocks to buy for you.
But in this blog post we’ll look at the do-it-yourself approach…
How To Find The Best Penny Stocks To Buy:
The best way to find penny stocks to buy right now is to start by eliminating the worst penny stocks. So what makes a risky penny stock?
Most of the time people get burned trading penny stocks because they are either illegitimate companies being fraudulently promoted, or (more common) they are small companies that don’t have a lot of trading volume. Make sense?
That means you can really limit your risk by looking for penny stocks with a lot of trading volume. A simple rule you can use is to make sure that your average trade is 1000 times less than the daily average. So if you want to buy 200 shares at a time, you should look for penny stocks with over 200K shares traded daily. If you’re buying 500 or more shares you should be looking for 500K or more in daily trading volume. Get the idea?
If you’re only 1% of the daily trading volume for a given penny stock, it’s unlikely that you will get trapped in the stock because the volume is liquid enough that you can sell your position without having to deal with a big bid/ask spread.
But daily trading volume isn’t the only thing you should worry about when you’re trying to find the best penny stocks to buy right now.
Buy Fundamentally Strong Penny Stocks
Fundamentals are another thing to keep in mind when you’re looking for the best penny stocks to buy. Even if you are strictly a technical trader you can really save yourself some pain by avoiding penny stocks without any fundamental value.
If you are going to buy penny stocks, I really encourage you to focus only on the best penny stocks available. Look for penny stocks with fundamental value, and then wait for the technical set-ups to take place. That’s how I’ve had the most luck and probably how you can too.
As a baseline for fundamental analysis of penny stocks, you just want to be sure that you’re not overpaying for a scam company. To do this best, you should use conservative valuation metrics (like P/E under 15 and P/B under 1.5). Ideally you would have a “margin of safety” but not all stock traders are that disciplined.
Best Penny Stock Screener [VIDEO]
One way that you can figure out how to find the best penny stocks to buy is by using a stock screener. The free stock screener at finviz.com can really help you shave hours off your research when you’re on the hunt for which penny stocks to buy.
Watch the short video below so you can get an idea of how to find the best penny stocks efficiently.
Hopefully this gives you an idea of how you can find which penny stocks to buy right now. You can watch more free penny stock videos on my YouTube channel. Subscribe if you like what you see.
Penny stock trading can be very profitable if you do it right, you just need to know how to find penny stocks to buy that won’t end up costing you money. So let me ask you, how do you find penny stocks to buy?
I look forward to your comments!
And By The Way: If you find yourself short on penny stock ideas, sign up for email updates below to get exclusive trading ideas available only through email.